On September 15th, 2019, Blackstone Real Estate Europe announced that the company is acquiring the Dream Global Real Estate Investment Trust (REIT) for a whopping $6.2 Billion U.S. Dollars. Dream Global is one of Europe’s top real estate companies.
A statement from James Seppala, Head of Blackstone Real Estate Europe read:
“We are delighted to be acquiring Dream global, a high quality and diversified portfolio of office and logistics assets located in Western Europe, which has been created by Dream over the last eight years. This business transaction is a great opportunity for Blackstone to expand its existing office and logistics portfolios in some of the largest and most important markets in the region.”
This business acquisition is a result of the hard work that Dream Global has done since its Initial Public Offering (IPO) in 2011.
The Transaction Details And Metrics
The transaction will be subject to the approval of at least 66 (2/3) of the Unit holders at a special meeting by the Unit holders. This business acquisition is also subject to other customary conditions such as regulatory approvals, and business transaction is expected to be sealed in December 2019. It is worth mentioning that the deal is not subject to any financial condition.
This acquisition by Blackstone shall provide customary representations, warranties, and covenants which includes customary non-solicitation covenants from Dream Global. The acquisition agreement also provides a “fiduciary out” that permits the Board to accept a superior proposal in certain circumstances. In a situation where the transaction is terminated, the acquisition agreement provides for the payment of termination fee to Blackstone and a reverse termination fee to Dream Global if the transaction is terminated in certain specified circumstances in the agreement.
Currently, Dream Global has suspended its customary monthly distributions, effective following payment on Monday, September 16, 2019, of its August monthly distribution.
In the transaction metrics, the cash consideration of $16.79 per Unit represents a significant premium of 18.5% to the closing price of Dream Global Units on the Toronto Stock Exchange (TSX) on September 13, 2019. It will also represent a total return of 47% in 2019. The average acquisition cap rate of Dream Global’s real estate portfolio at the time it was created was approximately 6.8%, which includes the significant Netherlands portfolio that was valued at 8.0% transaction cap rate in 2017.
The acquisition represents a 9.1% premium to Dream Global’s June 30, 2019, EPRA NAV, in which about 98% of Dream Global assets was appraised by third parties and it reflected the huge amount of value that the management team has created over the years.
Featured image via dream.ca